Butt v Mrowka

[2010] NSWCA 108

New South Wales

Court of Appeal

CITATION:	Butt v Mrowka [2010] NSWCA 108
HEARING DATE(S):	15 April 2010
JUDGMENT DATE:	17 May 2010
JUDGMENT OF:	Tobias JA at 1; McColl JA at 2; Sackville AJA at 3
DECISION:	(1) Appeal dismissed (2) The appellant pay the respondent’s costs of the appeal (3) The respondent’s application for leave to cross-appeal be dismissed (4) The respondent pay the appellant’s costs of the application for leave to cross-appeal
CATCHWORDS:	NEGLIGENCE—motor vehicle accident on narrow track—collision between motorcycle driven by appellant and station wagon driven by respondent—appellant injured—primary Judge found negligence not made outAPPELLATE REVIEW—unchallenged physical evidence—evidence supports primary Judge’s findingCOSTS—respondent’s offer of compromise—primary Judge found that the offer contained no genuine element of compromise—respondent’s cross-appeal involves no issue of principle
LEGISLATION CITED:	Civil Liability Act 2002Uniform Civil Procedure Rules 2005
CASES CITED:	Derrick v Cheung [2001] HCA 48; 181 ALR 301Fox v Percy [2003] HCA 22; 214 CLR 118Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358Knight v Maclean [2002] NSWCA 314Leichhardt Municipal Council v Green [2004] NSWCA 341The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120; 67 NSWLR 706Vairy v Wyong Shire Council [2005] HCA 62; 223 CLR 422
PARTIES:	Christopher Butt (Appellant) William Mrowka (Respondent)
FILE NUMBER(S):	CA 2009/00298282
COUNSEL:	P Maiden SC; M Holz (Appellant) K P Rewell SC; M A Cleary (Respondent)
SOLICITORS:	Byrnes & Cox Lawyers (Appellant) Sparke Helmore Lawyers (Respondent)
LOWER COURT JURISDICTION:	Compensation Court
LOWER COURT FILE NUMBER(S):	DC 1/06
LOWER COURT JUDICIAL OFFICER:	Boulton ADCJ
LOWER COURT DATE OF DECISION:	17 April 2009

CA 2009/00298282

TOBIAS JA
McCOLL JA
SACKVILLE AJA

Monday 17 May 2010

BUTT v MROWKA

Judgment

1 TOBIAS JA: I agree with Sackville AJA.

2 McCOLL JA: I agree with Sackville AJA’s reasons and the orders he proposes.

3 SACKVILLE AJA: The appellant, then aged 16, was injured on 29 December 2003. He was riding an unregistered 125cc Suzuki Moto Crosse motorcycle along Spring Creek Road, Lake Cathie, when he collided with the respondent’s Toyota Hilux four-wheel drive station wagon. The motorcycle was suitable for offroad travel and was not capable of being registered for use on a public road. The motorcycle did not have a speedometer.

4 The appellant was travelling south along Spring Creek Road, a narrow gravel-logging track within the Queens Lake State Forest, when he was confronted with the respondent’s vehicle travelling in the opposite direction around a curve in the road. The motorcycle collided with the station wagon on the latter’s front near side. In consequence, the appellant suffered serious orthopaedic injuries.

5 Following a four-day hearing, from 23 to 26 March 2009, in the District Court at Port Macquarie, the primary Judge (Boulton ADCJ) entered a verdict for the respondent on 17 April 2009. His Honour found (at 24) that none of the particulars of negligence alleged in the Statement of Claim had been made out and that the appellant had been “the author of his own misfortune”. To cover the possibility of a successful appeal, his Honour assessed damages for the injuries sustained by the appellant, had negligence been established, at $346,998.25. His Honour ordered the appellant to pay the respondent’s costs.

6 The appellant appeals against the decision of the primary Judge on liability. The appellant concedes that he was partially at fault for the accident, but challenges his Honour’s finding that the respondent was not shown to have been in breach of duty. The appellant seeks an order entering judgment on liability and invites this Court to assess the degree of contributory negligence for which he should be held responsible.

7 The respondent filed an application for leave to cross appeal from the decision of the primary Judge in relation to costs. His Honour declined to order the appellant to pay the respondent’s costs on an indemnity basis as from 20 July 2006, notwithstanding that on that date the respondent served an Offer of Compromise which the appellant did not accept. The respondent contends that the primary Judge erred in concluding that the Offer did not involve a genuine element of compromise and thus did not justify the award of costs on an indemnity basis. Both parties were content for the leave application to be dealt with on the basis of the written submissions.

THE PRIMARY JUDGE’S FINDINGS

8 The collision occurred at a point in the road where, viewed from the south, it curved to the right. Mr Wright, at that time a Senior Constable with the Crash Investigation Unit at Port Macquarie, inspected the site two days after the collision. Mr Wright prepared a plan which showed that the road narrowed from about 3.3 metres in width about 15 metres north of the point of impact to about 3 metres at that point. There was a slight decline in the road from the north (the direction in which the respondent was travelling). There were trees and other vegetation on each side of the road. According to Mr Wright’s unchallenged evidence, a speed limit of 80 kph was applicable in the area where the collision occurred.

9 The primary Judge made the following findings:

the appellant had not applied the brakes on the motorcycle prior to the impact, which occurred at the very edge of the gravel, at the line of the station wagon’s left headlight (at 18);
the appellant was so close to the station wagon and travelling on the motorcycle at such a speed when he first saw the station wagon, that he was unable to react by applying his brakes before impact (at 19);
the station wagon skidded to a stop or near stop at the point of impact (at 19);
there was no available path for the motorcycle to pass the station wagon to the appellant’s right (at 19);
the need to sound a horn on the track was dependent on the driver’s expectation of the nature of the traffic, including an expectation that any incoming vehicle would keep to the left of the track and, if a four wheel vehicle, would travel in the tyre tracks (at 21);
while the appellant had poor visibility of an oncoming vehicle, that was because his line of travel was perilously close to the inside of the curve and near the lantana shrubbery (at 21);
the appellant had failed to keep a proper look out, thereby preventing him from applying the brakes of the motorcycle some distance before the point of impact (at 21); and
the effective cause of the collision was the appellant’s failure to keep to the left of the road and his excessive speed in the circumstances (at 21).

10 The primary Judge summarised (at 23-24) his findings as follows:

“(i) …the [respondent’s] motor vehicle was travelling at a moderate speed close to the left hand side of the road approaching the curve. It skidded some 16 metres to a stop at the point of impact depicted in the yellow painted cross placed there by Constable Christensen later the same morning. The skid marks were traced in yellow by then Police Officer Wright two days later…
(ii) The [appellant’s] motorcycle was travelling close to the edge of the road on its incorrect side. He saw the oncoming vehicle too late to brake or take any evasive action colliding with the bull bar in the vicinity of its near side headlight. He was not keeping a proper look out and was travelling at an excessive speed in the circumstances.”

11 The reference to 16 metres in this summary appears to be a typographical error. Mr Wright provided precise measurements of the skid marks, but they were less than 16 metres.

APPELLANT’S SUBMISSIONS

12 The appellant’s written submissions contend the primary Judge made errors of fact and law and failed to analyse the evidence property. Mr Maiden SC, who appeared with Ms Holz for the appellant, identified four “basic submissions”.

13 First, it was said that the primary Judge erred in his analysis of the positions of the respective vehicles on their approaches to the point of impact and in his assessment of the drivers’ actions. Under this head, it was submitted that:

there was no physical or other evidence to support the finding that the appellant’s line of travel was perilously close to the inside of the curve;
the finding that the respondent had brought his station wagon to a stop at the point of impact was against the evidence, including the evidence of the respondent himself;
the primary Judge uncritically adopted the respondent’s evidence that he had been hard up on the left hand side of the road, and ignored the physical evidence of the track marks showing that during the skid the station wagon pulled to the left because of the camber of the track and gravity;
the primary Judge should have given more weight to the evidence that immediately after the accident the respondent apologised and should not have dismissed them as sympathetic comments to be given little weight; and
the primary Judge should not have found that the appellant’s line of vision would have been materially better had he been travelling in the left hand tyre track, since this overlooked the narrowness of the track.

14 Secondly, the appellant contended that the primary Judge had failed to resolve fundamental conflicts in the evidence. The matters complained of were these:

there were differences between two separate measurements of the skid marks that had been made by the station wagon and the primary Judge did not resolve the conflict;
a finding should have been made that the police attended the accident scene after the appellant’s motorcycle had been removed by his family and thus Senior Constable Christensen, who attended the scene of the collision on the day, could not have accurately determined the point of impact; and
Constable Christensen’s evidence was that he determined the point of impact by reference to the skid marks and plastic debris, but the photographic evidence disclosed no debris of this kind.

15 Thirdly, the primary Judge had erred in law in failing to take proper account of the topography of the track and the surrounding area, the narrowness of the track and the tightness of the “blind corner” when considering the actions of the appellant and respondent. Had his Honour done so, he would have taken into account the appellant’s evidence that he was attempting to negotiate a path between potholes in the road and the respondent’s evidence that he knew he was approaching a blind corner and would have pulled over to the left had he realised another vehicle was approaching. Moreover, even if the respondent was travelling at a “moderate speed” (as his Honour found), he was travelling too fast in the circumstances, particularly as he failed to take the simple precaution of sounding his horn.

16 Fourthly, the appellant submitted that the primary Judge had failed to give adequate reasons. It was submitted that his Honour concentrated on the actions of the appellant, but paid too little attention to the question of whether the respondent breached his duty of care to other users of the road.

17 In his oral submissions on behalf of the appellant, Mr Maiden emphasised that the road was a “single vehicle track”, by which he appears to have meant that there was not enough room for two full sized vehicles to pass each other in safety. He pointed out that the motorcycle had a width of 830 mm and the station wagon an exterior width (not allowing for a small protrusion of the bull bars) of 1690 mm. Given that the road was only 3 metres wide at the point of impact, any assessment of whether the respondent had breached his duty had to take account of the fact that there would have been less than 300 mm to spare had the motorcycle and station wagon passed each other.

18 Mr Maiden submitted that the primary Judge should have found that the respondent had breached his duty by failing to drive sufficiently close to the left hand side of the road prior to the collision, travelling at an excessive speed, and failing to sound his horn when approaching the “blind corner”. According to Mr Maiden, the appellant was travelling roughly along the middle of the road, having elected to move to the right to avoid pot holes located on the left of the road, some 12 to 14 metres south of the point of collision. Faced with the respondent’s vehicle suddenly coming towards him, the appellant had to choose whether to go left, go right or stop and hope he would not be hit. On the appellant’s account, he headed right in the hope that he would avoid the respondent’s vehicle, but could not do so. Had the respondent exercised due care, so Mr Maiden argued, the collision might have been avoided as the appellant would have been alerted to the danger and would have had more time to react. Alternatively, the respondent would have been able to stop in time to avoid colliding with the appellant’s motorcycle.

RESPONDENT’S SUBMISSIONS

19 The respondent did not dispute that he owed a duty of care to the appellant. However, Mr Rewell SC, who appeared with Mr Cleary for the respondent, emphasised that the duty was merely to take reasonable care to avoid harming other road users. The duty was not to take every measure which, with the wisdom of hindsight, might have avoided a collision and thus avoided harm to the respondent.

20 Mr Rewell submitted that the primary Judge’s findings of fact were not only open to him, but wholly in accordance with the incontrovertible physical evidence. Given the findings of fact, there was no basis, so he contended, for concluding that the primary Judge was in error in entering a verdict for the defendant.

REASONING

21 In assessing the appellant’s submissions two important matters must be borne in mind.

The Appellant’s Evidence

22 First, the primary Judge found that the appellant’s evidence was unreliable in a number of significant respects. His Honour did not suggest that the appellant was being deliberately dishonest. Rather, he considered that the appellant had not had the opportunity, at the time of the collision, to take in what had occurred and had later attempted to reconstruct events.

23 For example, the appellant had given various estimates of his speed at different times, leading his Honour to conclude that the appellant’s estimate of 25-30 kph at the time of the collision was the product of reconstruction and was unreliable. The appellant’s suggestion that he saw the station wagon and tried to brake and swerve further to the right was contradicted by other evidence he gave. Moreover the police witnesses had found no sign of braking by the motorcycle and were able to fix the point of impact at the very edge of the gravel. For these reasons, his Honour considered (at 19) it “inescapable” that the appellant had been so close to the station wagon and travelling at such a speed when he first saw it that he was unable to react by applying his brakes.

24 There is no basis for concluding that his Honour’s assessment of the appellant’s evidence involved misuse of the advantages he enjoyed as the trial judge: cf Fox v Percy [2003] HCA 22; 214 CLR 118, at 128 [29], per Gleeson CJ, Gummow and Kirby JJ. On the contrary, it is difficult to see how his Honour could have reached any other conclusion.

25 The appellant told the attending ambulance officers that he had been travelling at 60-80 kph, although the primary Judge placed little weight on this particular estimate of speed. Eleven days after the collision, the appellant gave a statement in which he said he was travelling at an “unknown speed”. In his cross-examination, he said that he had given that answer because:

“I wasn’t at all sure what speed I was actually going until I could get back out there to the actual site and have a look for myself.”

Earlier the appellant had given evidence that about 20 metres before the collision he was travelling (presumably slightly uphill) at 18 to 20 kph in second gear, but at that point he had not seen the station wagon as he was changing gears to increase his speed.

26 Mr Maiden’s submission that “[i]n the agony of the moment [the appellant] elected to go right” is, as the primary Judge found, inconsistent with the physical evidence. The report of Mr Wright stated that the damage observed to the front of the motorcycle corresponded to the damage observed on the front left side of the station wagon. A sketch prepared by Mr Wright showed that markings on the station wagon’s bull bar exactly matched the forks on the motorcycle. Photographs of the bull bar demonstrated the markings. This led Mr Wright to express the opinion, on which he was not challenged, that the motorcycle was effectively upright at the time of the impact. Since the motorcycle struck the station wagon upright and front on, the appellant could hardly have been taking evasive action by moving sharply to the right at an angle to the oncoming vehicle, as Mr Maiden suggested.

27 Mr Maiden relied on the appellant’s evidence that his motorcycle was slightly to the right hand side of the middle of the trafficable road surface as a basis for challenging the primary Judge’s findings that the appellant’s line of travel was perilously close to the inside of the curve and that his line of travel had obscured his vision of oncoming traffic. But neither Mr Wright, nor Constable Christensen observed any motorcycle brake marks or any sign of sudden evasive action that would have suggested a change in direction after the appellant saw the station wagon. Mr Wright expressed the view, on which he was not challenged, that the physical evidence was consistent with the motorcycle entering the curve in “racing line” fashion, whereby a vehicle uses a path of travel to “straighten the bend”.

28 The appellant’s own evidence was that although he tried to apply his brakes, there was no time for them to work and that he had no recollection of slowing down. He also agreed that, although he claimed to have moved to the right to avoid potholes (described by Mr Wright as shallow depressions approximately 30 mm in depth), there was plenty of room for him to have moved to the left of the potholes had he wished to do so. Despite Mr Maiden’s earnest insistence that this was a single vehicle track, the measurements showed that there was room for the motorcycle and the station wagon to pass each other if each was on its correct side of the track. Had the appellant been to the left of the track (and the potholes) as he approached the curve, the collision would not have occurred.

29 In his oral submissions, Mr Maiden challenged Mr Wright’s opinion as to the significance of the absence of skid marks or of any physical evidence of the appellant taking evasive action. However, neither Mr Wright nor Constable Christensen was cross-examined to the effect that evasive action by the appellant might not necessarily have left physical evidence of the attempt to avoid the imminent collision. In the absence of such a challenge and of any evidence explaining how the appellant could have taken evasive action without leaving skid marks or other physical evidence, the primary Judge was fully entitled to accept that the physical evidence supported Mr Wright’s opinion as the appellant’s line of travel immediately prior to the collision.

30 In these circumstances, no error has been shown in the findings made by his Honour as to the appellant’s line of travel, failure to keep a look out, speed, or failure to brake.

The Physical Evidence

31 The second important feature of the case is the physical evidence. I have already referred to some of the observations made and opinions expressed by Mr Wright (who had left the Police Force at the time he gave evidence).

32 In addition to the matters to which I have referred, Mr Wright made the following observations at his visit to the site of the collision:

There were two parallel skid marks on the roadway made by a northbound vehicle. The nearside skid mark was 11.6 metres in length and the offside 13.1 metres. Mr Wright applied yellow paint along the path of each skid mark and took photographs.
Mr Wright inferred and the primary Judge accepted that the skid marks were consistent with having been made by the respondent’s station wagon.
The skid marks were initially straight but contained a pronounced “ hook ” to the left at the end. According to Mr Wright, the hook was consistent with the vehicle sliding under gravity with the camber of the roadway as the vehicle slowed to a stop.
The left tyre mark commenced approximately 0.6 metres from the western road edge (that is, on the passenger side of the station wagon) and ended 0.3 metres from the western edge. The tyre marks ceased abruptly one metre from the painted mark placed by Constable Christensen on the roadway to mark the point of impact. A field of debris radiated from the area of the painted mark.
The painted mark was located 0.3 metres from the western edge of the roadway. To the west of that mark was an area of flattened grass near the road surface consistent with someone or something coming to rest there.
There was no evidence to indicate that the motorcycle had been pushed backwards at the time of impact (as presumably would have happened had the station wagon been moving). In particular there were no drag marks suggesting any such movement of the motorcycle.

33 On the basis of this physical evidence, Mr Wright drew two important conclusions:

(a) the marks placed the northbound station wagon to the left of the carriageway at both the commencement of the skid and at the time of impact;

(b) the station wagon was either at, or very close to, the end of its skid at the time of impact.

Mr Wright was not challenged in cross-examination on this evidence.

34 Mr Wright’s unchallenged evidence makes it impossible to accept the appellant’s submission that the respondent breached his duty of care by failing to keep sufficiently to the left of the road. Mr Wright’s report, a plan prepared by him and photographs showing his yellow markings at the site all confirm that at the commencement of the skid, perhaps 13 metres from the point of impact, the respondent’s left tyre was within 0.6 metres of the western edge of the road. At this point, the bull bar would have protruded even further towards the edge of the road (as appears from the photographs of the station wagon). While the road was certainly narrow, Mr Maiden did not explain how the respondent could have reasonably been expected to drive even closer to the edge than he did. The fact that the vehicle’s left tyre finished only 0.3 metres from the edge at the point of impact is attributable to the narrowing of the road and the vehicle sliding with the camber of the roadway. The physical evidence supported the respondent’s own evidence that he was “hard up on the … left hand side of the road” as he was approaching the curve.

35 Nor did Mr Maiden explain how it could have made any difference had the respondent driven closer to the western side of the road as he approached the curve. On the primary Judge’s findings, which cannot be successfully challenged, the appellant’s motorcycle collided upright and head on with the station wagon, without the appellant braking or swerving, the point of impact being on the left hand side of the station wagon. Since the respondent applied his brakes hard and went into a skid, he presumably would have been unable to swerve to the left. Leaving that difficulty aside, had the respondent travelled closer to the edge of the road, or veered as far as he could to the left (which was not very far) the collision would simply have occurred at a point closer to the centre of the station wagon’s bull bar. Moreover, taking a path closer to the western edge of the road would have limited even further the respondent’s line of vision towards the oncoming motorcycle.

36 It is also difficult to understand how the physical evidence is compatible with the submission that his Honour should have found that the respondent was travelling at an excessive speed in the circumstances. Mr Wright’s evidence was that, despite the respondent being prevented from seeing the appellant until very late (because of the path the appellant took across the curve), the respondent had come to either a complete stop or nearly a complete stop at the point of the collision. This conclusion was consistent with the respondent’s impression that his vehicle was moving slowly at the point of impact and with the evidence of his passenger, Ms Balkin, that the station wagon was “pretty much…at a stand still” at the point of impact. There was no error in the finding that it was the appellant’s speed, unchecked by any braking, that caused him to collide with the respondent’s stationary or almost stationary station wagon.

37 Mr Maiden challenged the conclusions reached by Mr Wright as to the respondent’s speed, on the ground that he had wrongly assumed that the motorcycle, immediately after the collision, had come to rest just in front of the station wagon. Mr Maiden relied on evidence from the appellant suggesting that his motorcycle had in fact come to rest behind the station wagon, indicating that the respondent’s vehicle may have been travelling faster than Mr Wright had thought. However, the respondent’s evidence was that after the collision the appellant ended up on the grass, some two metres to the front and side of the station wagon. The respondent’s passenger, Ms Balkin, gave evidence to the same effect. That evidence was entirely consistent with the physical evidence dealt with in Mr Wright’s report. The primary Judge was entitled to prefer that evidence over the appellant’s evidence that the motorcycle finished up behind the station wagon.

38 As I have noted, the appellant’s written submissions contend that Constable Christensen could not have located the point of impact from the debris on the road, since the appellant’s father and sister had given evidence that they had removed debris before Constable Christensen arrived at the scene. But his evidence was that the appellant’s father and sister were present at the scene when he arrived. Moreover, neither the appellant’s father nor his sister suggested that they had removed all debris from the site. It was not put to either Constable Christensen or Mr Wright in cross-examination that they were incorrect in reporting that they had seen debris at the site of the collision. Nor was it put to Constable Christensen that the motorcycle had been removed from the site by the time he attended the site of the collision on the day it had occurred.

39 Mr Maiden rather faintly suggested that the respondent had breached his duty of care by failing to sound his horn as he approached the curve. Whether there was any breach of duty depends on whether, in the circumstances, a reasonable person in the respondent’s position would have taken the precaution of sounding the horn: Civil Liability Act 2002, s 5B(1)(c). As the primary Judge pointed out (at 21), the response of a reasonable person would be dictated by a number of factors, including reasonable expectations as to the line that oncoming traffic would follow. On his Honour’s findings, had the appellant been travelling along the left hand side of the track as he approached the curve, not only would he have seen the respondent’s station wagon earlier, but the respondent would have seen the motorcycle earlier and would have had no difficulty in avoiding a collision.

40 The logic of the appellant’s position is that the driver of every vehicle driving along a track of this kind would be obliged, in the exercise of reasonable care, to sound his or her horn every time the vehicle approached a curve that restricted vision to some extent. However, the exercise of reasonable care did not require the respondent to assume that at every such curve a motorcycle or similar small vehicle would approach on the right hand side of the track, rather than on the left, and at a higher speed than was safe in the circumstances.

41 As Mr Rewell pointed out, it is not permissible to reason from the fact that, in hindsight, action might have been taken that would have avoided a collision to conclude that the defendant failed to exercise reasonable care. As the High Court observed in Derrick v Cheung [2001] HCA 48; 181 ALR 301, at 305 [13]:

“Few occurrences in human affairs, in retrospect, can be said to have been, in absolute terms, inevitable. Different conduct on the part of those involved in them almost always would have produced a different result. But the possibility of a different result is not the issue and does not represent the proper test for negligence. That test remains whether the plaintiff has proved that the defendant, who owed a duty of care, has not acted in accordance with reasonable care.”

See also Knight v Maclean [2002] NSWCA 314, at [65]-[67], per Heydon JA (with whom Meagher JA and Young CJ in Eq agreed); Vairy v Wyong Shire Council [2005] HCA 62; 223 CLR 422, at 461 [126], per Hayne J.

42 There is no substance in any of the other points raised on behalf of the appellant. In particular, there is no foundation for the submissions that the primary Judge failed to resolve conflicts in the evidence or failed to give adequate reasons for dismissing the proceedings. Nor has any error been shown in the primary Judge discounting the significance of any comments made by the respondent immediately after the collision, having regard to the physical evidence.

43 The appeal must be dismissed. The appellant must pay the respondent’s costs of the appeal.

COSTS

44 In his judgment delivered on 17 April 2009, the primary Judge ordered the appellant to pay the respondent’s costs on the ordinary basis. On 29 April 2009, the respondent filed a notice of motion pursuant to Uniform Civil Procedure Rules 2005 (“UCPR”) r 42.20, seeking different costs orders. The motion sought orders that the appellant pay the respondent’s costs on an ordinary basis up to 20 July 2006 and on an indemnity basis thereafter.

45 The basis of the respondent’s application was his Offer of Compromise dated 20 July 2006, which was expressed to be made pursuant to UCPR Pt 20. The respondent offered to compromise the appellant’s claim on the following basis:

“1. Verdict for the [respondent].
2. Each party to bear their own costs.”

The offer was open to be accepted for 28 days, but the appellant did not accept it.

46 In a judgment delivered on 17 June 2009, the primary Judge referred to UCPR r 42.15A, which provides as follows:

“(1) This rule applies if the offer concerned is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim concerned as favourable to the defendant, or more favourable to the defendant, than the terms of the offer.
(2) Unless the court orders otherwise:
(a) the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and
(b) the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, assessed on an indemnity basis:
(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and
(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.”

47 His Honour accepted that the effect of an offer of compromise, where the terms of r 42.15A(1) are satisfied, is to create a prima facie entitlement in the offeror to have costs awarded in accordance with the rule: Leichhardt Municipal Council v Green [2004] NSWCA 341, at [19], per Santow JA (with whom Bryson JA and Stein AJA agreed). However, his Honour also referred to authorities establishing that orders for indemnity costs should not be made under UCPR Pt 42 where the offer contains no genuine element of compromise: Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358, at 367-368, per Giles J. In his Honour’s view, the flaw in the respondent’s application was it had filed a defence only two months prior to making the offer of compromise. Accordingly, at that stage, its costs would have been minimal and the offer to pay its own costs contained little, if anything, by way of compromise. Since the offer contained no genuine element of compromise, the respondent’s application had to be dismissed.

48 The respondent’s submissions accept that, to be effective, an “offer of compromise” must contain a real element of compromise. That concession reflects the state of the authorities: see The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120; 67 NSWLR 706, at 708 [8], per Basten JA (with whom Santow JA and Young CJ in Eq agreed). The respondent’s application for leave to cross-appeal therefore raises no issue of principle. The only error said to be made by the primary Judge is that he did not take into account the strength or weakness of the appellant’s case. However, his Honour referred to the appellant’s case as being “rather thin from the outset” and took that into account in determining that the offer contained no genuine element of compromise.

49 The respondent’s application for leave to cross-appeal against his Honour’s dismissal of the costs motion should be dismissed.

ORDERS

50 I propose the following orders:

1. Appeal dismissed.

2. The appellant pay the respondent’s costs of the appeal.

3. The respondent’s application for leave to cross-appeal be dismissed.

4. The respondent pay the appellant’s costs of the application for leave to cross-appeal.

**********